Keeping home insurance available and affordable in our era of climate change and tech tools

Generally speaking, home insurance companies are free to pick which homes they want to insure and which they don’t.  There has been an explosion in tech tools that insurance companies can use to assess risks and decide who and what they are willing to insure and how much they will charge to sell policies and meet their business goals.  Drones, GPS technology, data mining, artificial intelligence, and predictive analytics are making it easy for insurance companies to be far more calculated than they had been about their decisions on the types of buildings, people, and locations they will insure.  Fear of the impact of climate change is compelling insurers to aggressively use those tools.

Pro-active steps to keep home insurance available and affordable include programs like the Match UP Insurance Finder that help consumers look in all corners of the market to find coverage options, legislation, and regulations that limit insurance non-renewals. and programs that help property owners fortify their homes and make them more attractive risks to insure.

The combination of the increased availability of data-driven tools and algorithms plus severe, destructive wildfires in recent years does not bode well for home and business property insurance consumers in wildfire-prone states, just as a similar scenario reduced options and raised prices in hurricane-prone states like Florida and Mississippi. After hurricanes Charley, Katrina, and Wilma blew through Florida, the options for insuring your property at an affordable rate in the private market all but dried up and there was a crisis. State government had to take creative action to restore a competitive marketplace.  Recently, in the aftermath of Hurricane Michael, the Florida Office of Insurance Regulation issued an emergency bulletin limiting insurance non-renewals to stop a wave of non-renewals and avoid a repeat of that earlier crisis.  Pro-active steps…

With the wildfires and ever-expanding technological tools, conditions in California are somewhat similar. There has been a great deal of discussion, and largely anecdotal evidence that many insurers are withdrawing from high fire risk areas. According to data from the CDI, more than 10,000 homeowners in high-risk counties were non-renewed by their insurer in 2016. More than 36 thousand homeowners in those counties chose to not renew their policies, however, presumably because of steep premium increases or lower coverage reasons. The data does not detail if these homeowners subsequently found insurance with other insurers, although there has been little policy growth to date in the homeowners’ insurer of last resort—the Fair Access to Insurance Requirements Plan.

United Policyholders and insurance regulators in a number of states are working hard to pro-actively keep a competitive private home insurance market, despite the problematic conditions described above (drought plus wildfire severity plus risk assessment technology plus climate change).

UP helped enacted legislation in California in 2018 that gives people who lose homes in wildfires and their neighbors a measure of assurance that their insurer cannot drop them right away.  Disaster survivors get two renewals, their neighbors get one.  It’s a start…